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Auto Stock Roundup: Tesla Issues Shares, GM Rejects 91% Claims, Stocks Plunge

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Global ills that are casting a pall over markets all over, dampened the mood in the auto sector as well, with large losses recorded by all stocks last week. Heavyweights like Tesla Motors, Inc. (TSLA - Free Report) , General Motors Company (GM - Free Report) and Ford Motor Co. (F - Free Report) recorded more than 10% loss each. The sharp fall in stock prices overshadowed all other developments in the sector.

Still worth noting is that Tesla raised around $738.3 million from its public issue of shares. Further, Kenneth Feinberg completed the assessment of all ignition switch claims received by General Motors. He found less than 10% of the claims as eligible for compensation.

News also surfaced that Toyota Motor Corporation (TM - Free Report) is testing alternative airbag inflators for its vehicles, following the massive recalls caused by the defective Takata ones. Meanwhile, Ford announced its Europe sales for July, while Honda Motor Co., Ltd. (HMC - Free Report) launched a new prototype crossover utility vehicle targeted at the Indonesian market.

(Read last to last week’s recap here: Auto Stock Roundup for Aug 20, 2015)

Recap of the Week’s Most Important Stories

1. Tesla raised approximately $738.3 million, after deducting underwriting discounts and commissions along with estimated offering expenses from a common stock issue that closed on Aug 19, 2015. The company sold 3,099,173 shares at $242 each, including 404,239 shares sold under options to underwriters, which were exercised in full. The issued offering includes 82,645 shares purchased by CEO Elon Musk.

Tesla plans to use the proceeds from the offering to accelerate its global business growth, including expansion of its stores, service centers, the Supercharger network and the Tesla Energy business; for the development and production of Model 3 and the Gigafactory; and for other general corporate purposes (read more: Tesla Sells 3.1 Million Shares to Raise $738.3 Million).

2. General Motors will have to provide compensation for less than 10% of the ignition switch claims filed, as Kenneth Feinberg – the lawyer hired to assess the claims – has rejected nearly 91% of them. According to Feinberg, only 399 of the 4,343 claims filed were eligible to receive compensation. Of the approved claims, 124 are related to death cases and 275 to injuries. For the approved death claims, the families are eligible to receive over $1 million each.

General Motors has a fund of around $625 million to provide compensation for the approved claims. As of Jul 17, 2015, the company had spent $280 million toward the compensation of such claims (read more: General Motors Rejects 91% of Faulty Ignition Switch Claims).

3. Ford recorded a 5.3% year-over-year rise in sales to 100,500 vehicles in its 20 traditional European markets in Jul 2015. With this, Ford’s monthly sales lagged the industry sales growth of 8.8%. In the first seven months of 2015, the company’s sales increased 9.7% to 769,300 vehicles, cruising ahead of the industry sales growth of 8.7% (read more: Ford's  Europe Sales Rise 5.3% Y/Y in July, 9.7% YTD).

4. Honda made the global launch of the BR-V Prototype at the GAIKINDO Indonesia International Auto Show (GIIAS) 2015. The BR-V Prototype is a 7-seater, new generation crossover utility vehicle that will be sold in Indonesia from early 2016 and launched in other countries later. Production of the vehicle will start from Jan 2016 (read more: Honda Launches BR-V Prototype for Indonesian Market.)

5. Toyota has started testing airbag inflators to be used as alternatives to the defective Takata airbag inflators that resulted in million of recalls. While the automaker is currently using inflators made by Daicel Corp., it has also starting testing those produced by Autoliv and Nippon Kayaku Co. The tests are being made to find out if the inflators are compatible with its vehicles.

Performance

The dismal market conditions pulled down all auto stocks over the last week. All stocks recorded large losses, led by Tesla, which lost almost 12% over the week.

Meanwhile, General Motors was the worst performer over the last six-month period with 24.7% loss. Advance Auto Parts Inc. (AAP - Free Report) remained the top gainer in the last six months, buoyed by the general trend of an upward movement since May, which offset the 5.8% loss recorded over the last week.

Company

Last 1-Week Period

Last 6 Months

GM

-11.2%

-24.7%

F

-10.6%

-19.2%

TSLA

-11.9%

+10.6%

TM

-6.5%

-13.0%

HMC

-7.2%

-6.2%

HOG

-8.3%

-13.7%

AAP

-8.7%

+10.7%

AZO

-5.8%

+9.9%

What’s Next in the Auto Space?

On Sep 1, 2015, major automakers will release their U.S. auto sales data for August. On the same day, Ford will pay its third-quarter dividend of 15 cents per share to shareholders of record as of Jul 31, 2015. Penske Automotive Group, Inc. (PAG - Free Report) will pay its second-quarter dividend of 24 cents per share to shareholders of record as of Aug 10, 2015.

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